The federal government approved a deal with the Cuomo administration that dramatically slashes Medicaid payments to New York for services provided to developmentally disabled people.

Under the restructuring, Medicaid payments will fall from more than $5,100 to $1,200 per resident per day at centers that serve the developmentally disabled. The new rate comes on the heels of a scathing report by the House Committee on Oversight and Government that charged New York overbilled Medicaid for these services by $15 billion over 20 years.

The committee said yesterday the new rates will save taxpayers some $1.2 billion over the next 18 months. “This is a step in the right direction,” said committee Chairman Darrell Issa (R-Calif.).

Gov. Cuomo (pictured) anticipated the cut in federal reimbursements earlier this year and trimmed funding from the state budget.

“Changes to New York’s Medicaid spending plan were included in this year’s budget in order to resolve this issue, which predates this administration,” said Rich Azzopardi, a Cuomo spokesman

“We are now able to move forward and focus on making sure as many resources as possible are directed toward treatment and services, and away from excessive administration costs and executive compensation.”